Latin music’s changing business landscape will be the focus of conference

Romeo Santos performs at AmericanAirlines Arena last May. The singer, who is one of the biggest stars in Latin music, appears at the Billboard Latin Music Conference this week and is the top nominee at the Billboard Latin Music Awards on Thursday.
Gaston De Cardenas
El Nuevo Herald File

Romeo Santos performs at AmericanAirlines Arena last May. The singer, who is one of the biggest stars in Latin music, appears at the Billboard Latin Music Conference this week and is the top nominee at the Billboard Latin Music Awards on Thursday.
Gaston De Cardenas
El Nuevo Herald File

Although the bulk of 700 attendees at the Billboard Latin Music Conference, running through Thursday at the Ritz-Carlton Miami Beach, are fluent in Spanish, English and a variety of musical genres, this week, they’ll be focused on learning the rapidly changing language of money in music.

The music business is in the throes of yet another paradigm shift, as consumers move away from music downloads to streaming services like Spotify, Pandora and Soundcloud. How artists, songwriters, record companies and music publishers earn money in this changing landscape — the entire structure of the music business — is very much in flux.

"There’s a lot of uncertainty and lack of information," says Leila Cobo, executive director of Latin content and programming for Billboard, who has led the conference for 14 years. "It’s changing so quickly that people are still getting the hang of it, in the mainstream and the Latin music business."

Although the conference has always been focused on business, this year that focus is sharper than ever. This year’s agenda includes only three conference-sponsored music showcases, fewer than ever before. In the past those performances usually included up-and-coming artists the labels wanted to boost. This year, Wednesday night’s show, an event called Billboard en Vivo that used to be the conference’s prestige performance slot, will have a single act, Colombian urban music star J Balvin.

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The conference winds up with the Billboard Latin Music Awards on Thursday evening, which will be broadcast live by Telemundo from the BankUnited Center in Coral Gables. The awards recognize the best-selling and most listened-to Latin music acts as determined by the Billboard charts. The artist with the most nominations this year is bachata/R&B hearthrob Romeo Santos; other top finalists include Enrique Iglesias, Balvin, Santana, Prince Royce and Marc Anthony.

Santos and Santana will do celebrity Q&A’s with Cobo on Wednesday afternoon. Musicians are also featured in sessions like The Divas Panel, with female artists, and others on Latin urban music and songwriting.

Among the business-oriented panels are several that explore ways to link artists with companies with marketing and sponsorship deals. The Art of Creative Partnering, for instance, will look at the partnership between mobile phone company Metro PCS and reggaeton star Daddy Yankee.

"Branding is huge," Cobo says. "Sponsors and brands more than ever want to get involved with music."

That’s especially true with Latin music, which companies see as an entry into the hearts and wallets of the growing U.S. Hispanic market.

"Music is seen as a big passion point for Hispanics, and now that everyone is aware of the Hispanic market, brands are acutely aware of that," Cobo says.

Another Tuesday session, Revenue Streams 101, will explore online streaming services, and the complex challenge for artists in tracking and getting money from that. It will be led by Leslie Zigel, a Miami-based entertainment lawyer whose clients include Pitbull, reggaeton star Wisin and Colombian pop singer Carlos Vives.

"My goal is to educate the artist on all the various revenue streams out there," Zigel says. "It’s a very, very complicated business. It was always complicated, but there used to be so much money people were in the dark."

Not anymore. The U.S. music industry has endured 15 years of tumult. Album sales, which peaked at 785 million units in 2000, dropped to 227 million last year. The online sales on iTunes and other sources that helped make up for some of that lost income are now being impacted by a new medium. People are increasingly choosing to listen to music on Pandora or Spotify, which as of January had 60 million active users, with 15 million paying $9.99 a month for the premium, no-advertising version.

Streaming, however, pays such a small amount to artists, amounting to a tiny fraction of a cent per stream, that it doesn’t yet come close to matching the income lost to declining physical and online sales. According to Zigel, the royalties for 1,500 streams of a song are equivalent to the 15 cents that usually goes to artists for a single $1.29 iTunes download. One data analysis showed that 1.1 million Spotify streams would earn an artist signed to a record label just $1,260.

That disparity has been a hot issue in the music world. Taylor Swift made headlines last fall when she refused to allow Spotify to stream her latest album, 1989, and subsequently took all her music off the service. Rap mogul Jay-Z made news this spring with the launch of Tidal, an artist-owned streaming service that pays higher royalties to musicians.

"The questions is will people adopt a user pattern … that will replace iTunes," Zigel says. He estimates it will take 270 million people subscribing to streaming services to bring in enough income to sustain the music business at its current level.

"Just like you saw the shift from CDs to downloads, it’s another seismic shift happening in the industry," he says.

Other sources of income include advertising on online music videos or placing songs in movies or TV shows. The old-fashioned business of touring — and the merchandise sales and sponsorship opportunities that go with it — has reemerged. Now, however, that’s less to drive music sales, as in the past, than as a revenue stream for crucial income.

Keeping track of the various formulas that outlets use to pay artists, or the companies that can do it for them, is immensely challenging. The conference provides one place for artists to figure that out, Cobo says.

"It’s a great place for up and coming artists to learn about the business and make connections," she says. "This is not a business of staying home and doing your music. It’s a business of going out and networking for your music and making alliances."